It’s not always easy seeing your monthly payments go up.
With inflation still quite high worldwide, it comes to no surprise to most economists that, for the seventh time this year, the Bank of Canada (BoC) has raised its interest rate, this time by 50 basis points.
The country’s rate now sits at 4.25%.
What to do when interest rates rise
While most Canadians are not new to the concept of rising rates, it’s not always easy seeing your monthly payments go up. While weathering the inflation storm hasn’t been easy, there are some ways to help you manage your brand new budget:
- You can reduce your monthly expenses so you’ll have more money to go towards your debt. While it might be hard saying no to a couple splurges, cutting back will help you stay on track
- You can consolidate most of your debt, such as credit cards or line of credit payments, into a loan with a lower interest rate
- If you’re shopping around for a house, avoid getting the maximum mortgage or line of credit offered to you. While it might be nice to have a lot of wiggle room when it comes to picking your home, finding something a little less than your price range could help you in the long run.
- You can try to find a second stream of income to help off-set your new additional payments
- You can continue to save for an emergency fund. While your payments may not be as much as they used to be, putting some amount towards savings can still help if you experience any other financial setbacks
Or lock in your mortgage rate, today
However, for current homeowners on a variable-rate mortgage: if you’re worried that you’re close to, or already at, your trigger rate, and you’re tired of weathering the inflation storm, it might be time to consider locking into a fixed rate.
Making the switch isn’t hard, but if you need help understanding what you can do, take 10 minutes or less to fill out our application and we’ll make sure you’re connected to one of our trusted mortgage advisors to help you figure out what’s best for you.